Land deal, push from mayor's ally linked in suit

San Diego Union Tribune

By Jeanette Steele

November 10, 2006

Top city officials slashed the price on a controversial La Jolla land sale under pressure from a high-powered consultant with ties to Mayor Jerry Sanders, according to a lawsuit filed against the city.

Attorneys for the La Jolla Shores Association and some other La Jolla residents have asked a judge to block the sale to Hillel of San Diego, approved by the San Diego City Council in May.

However, a Superior Court judge said yesterday she wouldn't consider e-mails as evidence because they were offered too late in the process.

The vacant property is a little less than an acre at La Jolla Village Drive and Torrey Pines Road. Hillel wants to build a worship center for Jewish students from the University of California San Diego.

The lawsuit contends that e-mails between city officials and the chief executive of OliverMcMillan show that the city fraudulently shaved $420,000 off the $1.36 million price that an appraiser said the land might fetch if sold for a housing development, lawyers say. The e-mails were offered as exhibits in the court case.

The mayor's spokesman, Fred Sainz, called the accusations “absolute fantasy.”

Sainz said the city's decision to adjust the price was a “policy decision, about which people of good judgment can disagree.” He added, “The mayor and his staff arrived at those judgments independently.”

One of the e-mails in question was from Dene Oliver, chief executive of OliverMcMillan, who was acting on behalf of Hillel.

“A price of 1.3 million will kill this deal which is NOT Jerrys (sic) desire,” Oliver wrote in an April 11 e-mail to Jim Waring, the mayor's deputy for land use and economic development.

On April 18, Waring sent an e-mail to a City Council staffer saying “ ... we have reached a verbal agreement to sell the Hillel site for $940,000 cash.”

The city has said it reduced the price from $1.36 million because of the improvements Hillel faced to make the site ready for its project.

Those requirements would not be necessary for a housing development, according to an April 7 e-mail from Jim Anthony of the city's real estate assets department.

The final appraisal: $940,000.

Calling the figure “tainted,” the court papers argue that the city broke its policy on selling land at fair market value.

An attorney for Hillel said the opposition was stringing e-mails together out of context and there was no fraud.

“To say that it might be worth more for residential is irrelevant,” said Steven Strauss, Hillel's attorney, who noted the city granted exclusive negotiations with the Jewish organization in 2000. “That wasn't the authorized sale negotiation from 2000.”

Opponents question the involvement of Oliver, who has held high-profile appointments to city boards, including chairing the San Diego Convention Center Corp. board. Oliver's company Web site says he is “currently working on behalf of the Mayor” on the convention center expansion.

“Telling the mayor's staff what the mayor wants – that's interesting to say the least,” said attorney Marco Gonzalez, whose firm represents the La Jolla residents. The court papers call the deal “collusion and fraud.”

Oliver declined to comment because of the lawsuit.

Sainz said Oliver was working as a volunteer on behalf of Hillel and had nothing to gain from the transaction.

The San Diego Union-Tribune interviewed La Jolla real estate agents in May and found mixed opinions about the price. Two agents said the city's price was about right because major roads nearby made the site less attractive for housing. Another agent predicted that a developer might pay double the city's asking price because vacant La Jolla land is scarce.

The opponents' lawsuit was filed in June. The plaintiffs argued that the city violated California environmental law and sold the land at a below-market price. The details of the e-mail exchanges come from court papers filed Oct. 30.

The conflict over this triangle of dirt stretches back six years. In 2000, the City Council granted Hillel the exclusive right to negotiate for the land after the city issued a request for proposals.

A nearby homeowners association had proposed to keep the property as open space, as it was once zoned, and the group sued the city and Hillel over the 2000 decision. The homeowners lost the suit and an appeal.

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